Brent crude oil dropped $1.67 a barrel, or 3.1 percent, to a low of $52.80 before recovering to around $53.45 by 1415 GMT. U.S. light crude oil slipped $1.30 to $44.92 and was last 70 cents lower at $45.52.

Oil prices reached multi-year highs in early October but are now approaching their lowest levels for 18 months.

Both crude oil benchmarks have lost more than a third of their value since the beginning of October and are heading for losses of more than 20 percent in 2018.

"Fear of a bear market remains in place," said Johannes Gross at Vienna-based consultancy JBC Energy.

Three months ago it looked as if the global oil market would be under-supplied through the northern hemisphere winter as U.S. sanctions removed large volumes of Iranian crude.

But other oil exporters have more than compensated for any shortfall, filling global inventories and depressing prices.

The fuel glut has combined with faltering investor sentiment in other asset classes, producing a bear market for oil.

Stock markets rebounded on Wednesday after U.S. President Donald Trump's administration attempted to shore up investor confidence.

The Organization of the Petroleum Exporting Countries met earlier this month with other producers including Russia and agreed to reduce output by 1.2 million barrels per day (bpd), equivalent to more than 1 percent of global consumption.

But the cuts won't take effect until next month and oil production has been at or near record highs in the United States, Russia and Saudi Arabia, with the U.S. pumping 11.6 million bpd of crude, more than both Saudi Arabia and Russia.

Although U.S. sanctions have put a cap on Iran's oil sales, Tehran has said its private exporters have "no problems" selling its oil.

"Markets need more concrete evidence on improving fundamental metrics and to bring the supply-demand relationship back to balance before oil prices can reach a real bottom," said Margaret Yang, market analyst for CMC Markets.

Data on the U.S. market will appear in the next couple of days with figures from the American Petroleum Institute on Thursday and a report from the U.S. Energy Information Administration on Friday.

A Reuters survey estimated that U.S. crude inventories dropped 2.7 million barrels in the week to Dec. 21.